2011 the year of the SUV?

The main trend

With new hybrid and electric models being trooped out by almost every major car manufacturer you would be forgiven for believing that the public was, en masse, moving away from large, noisy and relatively high emissions vehicles. This, however, is not the case according to last months FCAI (Federal Chamber of Automotive Industries) vehicle sales report.

Sports utility vehicles now make up 24.5% of all new vehicles sold in March of this year. The significance of this lays in the fact that despite a predominantly flat economic climate; the SUV class actually jumped from 22.8% (March 2010) to this new figure of 24.5%. The rest of the figures (light, small and medium classes experienced notable drops) indisputably point to the overarching trend; Australians, in the main, are moving to larger engines and larger vehicles.

Volumes by vehicle class year on year comparison

The Vehicle sales by region year on year comparison

The main findings of the report

FCAI Chief Executive Andrew McKellar is quoted as noting “Notwithstanding slightly lower sales during the month, the demand for new vehicles is broadly consistent with other retail and consumer demand indicators". In plain terms this basically means that sales are stable; there’s no great party in the auto industry but equally showrooms are not being overrun by tumbleweeds and chronically bored sales people.

What does this mean to fleet managers?

Sadly, stable auto sales figures would not ordinarily act as a starter gun for fleet managers looking to refresh a car fleet. The news articles from the FCAI compound this point further by highlighting that "sales to private customers increased 4.1 per cent during February to total 39,776 units – outselling business and fleet purchases”.

While this doesn’t mean that dealers will forget about fleet purchases it does mean that fleet purchases and their importance may be marginally diminished in the eyes of the car sales industry. Coupling this recent shift in figures with the much anticipated surge in car purchases from Queensland (people replacing flood damaged vehicles {once their insurance payouts are delivered}) could see car marketing emphasis shift further towards individual buyers.

What does this mean to those interested in Novated Leases?

While vehicles are getting bigger and bigger and engines becoming more and more powerful it has to be said that the vehicles themselves are becoming litre for litre more fuel efficient year on year. This represents real value for individuals who may be thinking of purchasing a newer model on a novated lease. For the first time customers now have real choices in the hybrid range (and a very small electric range) and sharp customers will note that the opportunity now exists to hedge from increasing fuel prices by upgrading to a more fuel efficient vehicle.

Summary

In summary people are buying bigger and slightly more fuel efficient cars, consumer sales are driving the auto industry away from a serious slump and the outlook (with the Queensland car rush looming) is generally positive. This said, all current stability in the market could be thrown into disarray depending on the complexion of, make up of and specifics of a carbon tax which could be with us as early as next year. Will things be happily plodding along like this next year? Well, we’ll know this time 2012.